Quarterly report pursuant to Section 13 or 15(d)

Note 1 - Organization, Business and Financial Condition

v3.19.3
Note 1 - Organization, Business and Financial Condition
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
Note
1.
  
Organization, Business and Financial Condition
 
Nature of business
In
October 2019,
Neuralstem, Inc. changed the name of the company to Seneca Biopharma, Inc. Seneca Biopharma, Inc. and its subsidiary are referred to as “Seneca,” the “Company,” “us,” or “we” throughout this report. The operations of our wholly owned subsidiary located in the People’s Republic of China are consolidated in our unaudited condensed consolidated financial statements and all intercompany activity has been eliminated. The Company operates in
one
business segment.
 
Seneca Biopharma, Inc., is a clinical-stage biopharmaceutical company developing novel treatments for various diseases of high unmet medical need. The Company is in the process of transforming the organization through the acquisition or in-licensing of new science and technologies, to develop with the goal of providing meaningful therapies for patients.
 
On
October 31, 2019
the Company announced it had entered into a non-binding term sheet with Jiangsu QYuns Therapeutics Co., Ltd., (“QYuns”) for an Exclusive License Agreement for certain of QYuns Therapeutics’ assets, a pipeline of cytokine-targeted monoclonal antibodies for the treatment of a range of auto-immune disease. Subject to entering into definitive agreements and receiving necessary approvals, Seneca and QYuns will enter into a royalty- and milestone-free, perpetual, non-cancelable, exclusive worldwide, other than in Greater China (which includes Hong Kong, Macau and Taiwan and certain other Asian territories) license to develop and commercialize the licensed assets. The transaction is subject to several conditions including the parties entering into definitive agreements as well as approval by Seneca’s shareholders. As consideration for the license, Seneca will issue QYuns an as yet to be determined number of equity securities. Seneca can give
no
assurance that the parties will enter into such definitive agreements, that Seneca’s shareholders will approve the transaction, or that if approved, the transaction will ultimately be consummated or that Seneca will be able to successfully develop the in-licensed assets.
 
In addition to the anticipated development of in-licensed or acquired technologies, the Company plans to continue to maintain NSI-
566
(stem cell) and NSI-
189
(small molecule) and related clinical programs and will seek to partner these assets for further development.
 
The Company was founded in
1997
and currently has laboratory and office space in Germantown, Maryland and laboratory facilities in the People’s Republic of China. Our operations to date have primarily focused on developing business strategies, raising capital, research and development activities, and conducting pre-clinical testing and human clinical trials of our product candidates. The Companies operations will continue to be focused on development activities, including conducting pre-clinical testing and human clinical trials of novel product candidates licensed from QYuns for the treatment of various diseases.
 
On
July 17, 2019
the Company effected a
1
-for-
20
reverse stock split of its common stock. Stockholders’ equity and all references to share and per share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the
1
-for-
20
reverse stock split for all periods presented.
 
Liquidity and Going Concern
The Company has incurred losses since its inception and has
not
demonstrated an ability to generate significant revenues from the sales of its therapies or services and have
not
yet achieved profitable operations. There can be
no
assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and pre-clinical testing, and commercialization of our products will require significant additional financing. These factors create substantial doubt about the Company’s ability to continue as a going concern within
one
year after the date that the consolidated financial statements are issued. The consolidated financial statements do
not
include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
 
In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position at
September 30, 2019,
our cash flow and cash usage forecasts for the period covering
one
-year from the issuance date of this Quarterly Report filed on Form
10
-Q and our current capital structure including outstanding warrants and other equity-based instruments and our obligations and debts. In
July 2019,
we completed an underwritten public offering of our securities which resulted in net proceeds of approximately
$6.6
million (See Note
4
).
 
We expect that our existing cash and cash equivalents will be sufficient to enable us to fund our anticipated level of operations based on our current operating plans into the
third
quarter of
2020.
Accordingly, we will require additional capital to further develop our product candidates, conduct our pre-clinical and clinical development programs and to fund our operations. We anticipate raising additional capital through the private and public sales of our equity or debt securities, collaborative arrangements, licensing agreements or a combination thereof. Although management believes that such capital sources will be available, there can be
no
assurance that any such collaborative or licensing arrangements will be entered into or that financing will be available to us when needed in order to allow us to continue our operations, or if available, on terms acceptable to us. If we do
not
raise sufficient capital in a timely manner, among other things, we
may
be forced to delay, scale back or eliminate some or all of our research and product development programs, planned clinical trials, and/or our capital expenditures or to license our potential products or technologies to
third
parties on unfavorable terms. We currently do
not
have any commitments for future funding from any source.
 
We have spent and will continue to spend substantial funds in the research, development, pre-clinical and clinical testing of our small molecule and stem cell product candidates and we anticipate spending additional funds to maintain these programs as we seek partners to further their clinical development. Additionally, if the QYuns transaction is consummated, we anticipate spending substantial funds on the development of the in-licensed programs with the goal of ultimately obtaining approval from the United States Food and Drug Administration (the “FDA”) and its international equivalents regulatory agencies, to market and sell our products. We have also begun spending funds on the evaluation and new assets and technologies with the goal of acquisition and development.
No
assurance can be given that (i) the FDA or any other regulatory agency will grant approval for us to market and sell our product candidates, (ii) if regulatory approval is granted, that we will ever be able to sell our proposed products or be profitable, or (iii) that we will be able to identify and acquire and/or in-license promising new assets or technologies.